KEY HIGHLIGHTS
- Bank Indonesia held the BI Rate at 5.75%, the Deposit Facility at 4.75% and the Lending Facility at 6.50% at the 18-19 August RDG chaired by acting Governor Destry Damayanti, in line with consensus. It is the second straight hold, extending the pause after 100 bps of hikes in May-June; no hawkish surprise.
- The hold anchors Rupiah stability amid Middle East volatility while keeping inflation within the 2.5±1% target. The Rupiah firmed to IDR17,855/USD (+0.78% ptp) and July CPI eased to 2.88% (core 2.76%), giving room to stand pat while BI widens FX-swap incentives (Swap 12.5%, DNDF 15%) to draw inflows.
- The domestic backdrop stays firm (2Q26 GDP +5.29%, loans +13.58%, reserves USD145.3bn), but global risks persist · soft world growth near 3.0% and an expected Fed hike in 4Q26 that keeps the dollar firm.
- For the JCI the read is neutral-to-positive, with no hawkish surprise; the stance is pro-stability, not pre-emptively dovish. Key watch: the Rupiah’s path and Fed direction into year-end, which will set the timing of any BI easing window.
Regards, Aldiracita Research